Dublin, Ireland – A picture of dysfunctionality of Ireland’s housing market has been painted by today’s 2016 Census release ‘Housing in Ireland’. The results show that Ireland fails at housing: we fail to build enough housing, we fail to build housing where it is most needed and we fail to build housing of the type demanded by occupiers.
- Lack of housing
The 2016 Census data shows that 2,003,645 dwellings were recorded in 2016, representing an increase of just 0.4% or 8,800 dwellings on the housing stock enumerated since the 2011 Census. This represents a significant decline in relation to the previous inter-censual period when the housing stock increased by 12.7% between 2006 and 2011. The lack of construction activity is also reflected in the fact that only 2% of the housing stock was built between 2011-2016, despite the population increasing by 3.8% during the same period, resulting in the average household size increasing from 2.73 to 2.75 over the period. The increase in average household size is equivalent to a loss of housing space per person in the state and has had dire consequences, most visibly in the homelessness crisis that is evident in Dublin’s streets.
- Housing built in the wrong areas
While the vacancy rate decreased by 15.2% between 2011 and 2016, it remains stubbornly high with 12.3% or 245,460 dwellings in Ireland vacant in 2016. Occurring at a time when there are serious issues with homelessness, the high prevailing vacancy rate shows that we are not building housing in the right areas. For example, South Dublin had the lowest vacancy in Ireland with just 13 dwellings per 1,000 vacant followed by Fingal with 17 per 1,000. Meanwhile, Leitrim and Roscommon had some of the highest with 126 and 90 respectively. In regional locations such as these, where demographic growth is weak, oversupply is likely to remain a problem in the years to come with the ESRI forecasting that many of these areas will remain oversupplied until 2021.
- Failure to build housing of the type demanded by occupiers
The results show that 90.7% of us live in houses rather than apartments, by far the highest in Europe where the average is 57.4%. Despite being the capital city, 79.6% of Dublin’s residents live in houses, still well in excess of the average. While the 2016 Census does show that houses as a share of the stock declined by 2.2% since 2011 (with apartments rising by a corresponding factor), the pace of change is too slow. The young international workforce that populate the prime offices in Dublin’s docklands wish to live close to where they work and the lack of density in Dublin City Centre saw residential rents shoot up the most in in this location, with rents in the South and North Docklands seeing an average increase in rent of 30.8% and 29.1% respectively between 2011 and 2016. It is imperative that the ideological opposition to height be addressed, so that we can build accommodation of scale in areas where it is demanded by the market.
Update of housing forecast
According to the Census 2016, the population of Ireland increased by 3.8% or 173,613 people between 2011 and 2016, representing an average increase of 0.8% per annum. We at Knight Frank have updated our housing forecast to give an estimation of how many houses we need to build based on population trends.
As illustrated in Table 1, we need 31,545 houses immediately to alleviate pent-up demand as a result of the population growth of recent years. Furthermore, even if we were to deliver this quantum immediately, we would still need circa 11,000 units over the coming years, illustrating the severity of the supply crisis. With just 4,234 units delivered in 2016, it is likely that pent-up will demand will continue to grow in 2017 given the low level of house building taking place in the market.
Other key results from today’s release
- The lack of supply has forced many household into the private rented sector, with the number of households in rented accommodation increasing by 4.7%. This has resulted in the home ownership rate decreasing to 67.6% which represents the lowest level since 1971.
- The impact of the lack of finance currently available in the market has also been illustrated in the Census data. According to the report, the proportion owning urban homes through a mortgage or loan has fallen sharply from almost 40% in 2006 to 30% in 2016.
- At the same time, renting has overtaken both homeownership categories to become the predominant tenure status in towns and cities, rising from a share of 27% in 2006 to 36% in 2016.
- This is also reinforced by the data which showed that the age at which home ownership became the majority tenure category was 35 years in 2016, compared to 32 years in 2011 and 26 years in 1991.